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The UK legislation on the valuation of supplies¹ does not make specific reference to subsidies. HMRC is empowered to make regulations providing that the consideration for a supply includes (where it would not otherwise be included) money paid in connection with the supply by persons, other than those to whom the supply is made² but no regulations have been made to date.

Nonetheless Archived Directive 2006/112/EC (that is, the VAT Directive as it stood at Brexit IP completion day³, from which the UK provisions were derived) provides that the taxable amount is everything that constitutes the consideration obtained by the supplier, including subsidies directly linked to the price of such supplies⁴.

In Office des Produits Wallons ASBL v Belgian State⁵ , the ECJ held that the mere fact that a subsidy could affect the price of a supply does not necessarily mean that the subsidy forms part of the consideration (and therefore the taxable amount). There must be a direct and unequivocal link between the subsidy and the relevant supply.